This looks at another example from the entertainment industry, specifically how one chain of movie theaters offers significant discounts to serious moviegoers who will jump a hurdle in order to save some money.
It starts with joining the program and getting a membership card. Right away that card saves you 10% on all concession prices (and any little bit helps with those prices). Tickets for Tuesday night, already discounted, are also discounted another 10%.
It's a hurdle because you have to join the program, get the card, carry the card, and present it every time you buy tickets or snacks. No doubt there are many people that wouldn't want to bother with all that, and the theater continues to charge them full price.
This means that the theater is not cannibalizing full price sales to people that aren't really serious about getting discounts. The program is a great example of price discrimination – charging different prices to different people based on how they value the product.
There is a further discount in the form of accumulated points redeemed for free tickets. Every time you purchase a ticket you earn 100 points. You can redeem 1000 points for a free ticket, which works out to an additional discount of about 9%. For people that really love going to the movies that adds up.
There is also a kind of easter egg that is beloved by people that are serious about the program. A special combo at the concession stand includes 1000 points – enough for a free movie. When you back out the cost of the snacks those 1000 points cost you $7.02. You can buy enough points to get a free movie for just over $7.00.
Those points can be redeemed for any ticket, including a $15.99 Ultra AVX or $19.99 IMAX ticket. You can buy a $20 ticket for $7 – a discount of about 65%.
If you like going to the movies (and like the snacks in the combo) it is an amazing deal. But, again, it involves a hurdle. Now, in addition to joining the program, carrying the card, etc. you need to be thinking ahead – you are basically paying in advance for tickets that you hope to use sometime in the future. But, if you can plan ahead, you can save a lot of money.